Financial risks of European wind ‘set to increase’

The proportion of Europe’s wind capacity unexposed to market and price risks is expected to fall from 75% this year to as low as 6% by 2030. That’s the prediction […]

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By Jonny Bairstow

The proportion of Europe’s wind capacity unexposed to market and price risks is expected to fall from 75% this year to as low as 6% by 2030.

That’s the prediction made in a new report from WindEurope and Swiss Re Corporate Solutions, which suggests hedging against volume risk is likely to prove a sensible way to address uncertain project revenues.

The companies say auctions, feed-in-premiums and power purchase agreements remove some of the price risk but still leave asset owners exposed to a degree of volume risk due to the variability of the generation and timing of wind output.

They suggest an average wind farm of 30MW may need to hedge for +/-10% variations each year in production forecasts to improve cash flow predictability to asset owners.

Pierre Tardieu, WindEurope Chief Policy Officer said: “Installed wind capacity in Europe could double to 323GW by 2030.

“With the growth of the wind energy sector and its increased exposure to price and volume risk there will be a need for a variety of revenue stabilisation mechanisms.”